Closing The Transaction.
When we talk about closing the transaction, or closing the sale of a business, you may picture a conference table in a boardroom, attorney’s office or Escrow Company. Rightfully so, because when we take an engagement, that is where we ultimately strive to end up. However, the closing process truly begins with the day we engage a business owner with our exclusive right to sell.
From the moment we engage, compose the Confidential Business Review, begin marketing the business, locate a buyer, navigate due diligence, etc., we are “closing the transaction”. For this article, though we will focus on the traditional sense of the term “closing the transaction”, concentrating more on the post offer phase of the transaction.
Once we receive a Letter of Intent from multiple acquirers, we carefully compare and consider each LOI with our seller, eventually determining which LOI to proceed with (please see our “Path to a Successful Sale” for more detail on this step in the process). At this point due diligence of the company commences, including review of financials, operations, legal, human resources, etc. Our goal is to provide as much of the seller’s information up front in this process, in order to minimize the disruption to the seller. How do we accomplish that? We have represented so many companies in the sale of their businesses, that over the years we have collected over 50 due diligence checklists from private equity groups, corporate buyers, family offices and high net worth individuals. We’ve compared and cross referenced these lists, side-by-side, and created our own comprehensive “due diligence” checklist.
We provide our sellers with this checklist once we begin collecting information for our Confidential Business Review. We often instruct our sellers to begin reviewing this document and providing the requested documentation, but we advise them to slowly and steadily find and provide that documentation. We employ this technique because in our experience, we realized this is a far less stressful and time intensive method for preparing for due diligence. What we strive to avoid is receiving an offer from a buyer and subsequently scrambling to complete the due diligence checklist. This creates unnecessary urgency and stress. By using our technique of starting to address our due diligence checklist with the slow and steady approach from the beginning of the engagement, we avoid that stress.
As a purchaser navigates due diligence, and we begin to feel comfortable that the buyer is becoming more comfortable, we expect the introduction of the Purchase Agreement. The concurrency of these two phases occurs because time is of the essence with these transactions. By using this technique, we keep the buyer committed to the transaction and we shorten the timeline of the deal. We help coordinate the negotiation and execution of the purchase agreement. We are not attorneys, but are job is to quarterback the deal, which includes managing the attorneys and other professionals on either side of the transaction. We are included in all lines of communication, because our job is to manage every detail of the process to and through the closing.
In transactions of the size and scope we deal with, there are almost always lenders involved. Depending on the type of buyer, we are intimately involved with sourcing the lender, as well as providing the lender the information they need in the format they require. This step of the process occurs at different times in each transaction, but it is always concurrent with one or more steps in the closing process. This is a very involved aspect of the transaction, and we are well versed in working with lenders of all kinds. We understand there may be third party business valuations, real estate appraisals, survey’s environmental studies, and equipment appraisals that will be required from the lender. As you can imagine, the information needed to perform these reports is immense, and our process of collecting data up front greatly alleviates the pressure of completing these reports. Again, our goal is to minimize the time required of our sellers.
As these aspects of the transaction begin to come together, and we see that due diligence is coming to a successful conclusion, the lender has approved the deal, the purchase agreement has been fully negotiated and eventually executed, we have already begun to set up escrow.
We have developed a strong relationship with our attorney/escrow companies we use for our closing. They not only provide necessary closing documents, but they provide a number of other services to ensure a proper closing. These services range from UFOC lien searches, secured and perfectable liens on behalf of the seller, judgments searches, secured creditors searches, prorated costs calculations effecting the transactions, bills of sale, closing sheets and instructions, money deposits and wiring, etc. The phase of the process is critical, because it wraps the entire transaction up and has to be executed flawlessly. Very few escrow companies are experienced and adepts at handling business transfers, real estate, and the litany of other services that may be needed. The companies we use have that ability.
Once the transaction is successfully finalized, the buyer and seller will begin the next phase of the ongoing relationship, typically starting with the training and transition phase. If your goal is to realize a successful closing, we will help you achieve that goal. We are “hands on” from the beginning until the end, and we take no step for granted. Call Les Wozniak of the The George Ryan Group at 214-682-8562 to begin this life changing process. We are ready to work with you to make your dream a reality.
From the moment we engage, compose the Confidential Business Review, begin marketing the business, locate a buyer, navigate due diligence, etc., we are “closing the transaction”. For this article, though we will focus on the traditional sense of the term “closing the transaction”, concentrating more on the post offer phase of the transaction.
Once we receive a Letter of Intent from multiple acquirers, we carefully compare and consider each LOI with our seller, eventually determining which LOI to proceed with (please see our “Path to a Successful Sale” for more detail on this step in the process). At this point due diligence of the company commences, including review of financials, operations, legal, human resources, etc. Our goal is to provide as much of the seller’s information up front in this process, in order to minimize the disruption to the seller. How do we accomplish that? We have represented so many companies in the sale of their businesses, that over the years we have collected over 50 due diligence checklists from private equity groups, corporate buyers, family offices and high net worth individuals. We’ve compared and cross referenced these lists, side-by-side, and created our own comprehensive “due diligence” checklist.
We provide our sellers with this checklist once we begin collecting information for our Confidential Business Review. We often instruct our sellers to begin reviewing this document and providing the requested documentation, but we advise them to slowly and steadily find and provide that documentation. We employ this technique because in our experience, we realized this is a far less stressful and time intensive method for preparing for due diligence. What we strive to avoid is receiving an offer from a buyer and subsequently scrambling to complete the due diligence checklist. This creates unnecessary urgency and stress. By using our technique of starting to address our due diligence checklist with the slow and steady approach from the beginning of the engagement, we avoid that stress.
As a purchaser navigates due diligence, and we begin to feel comfortable that the buyer is becoming more comfortable, we expect the introduction of the Purchase Agreement. The concurrency of these two phases occurs because time is of the essence with these transactions. By using this technique, we keep the buyer committed to the transaction and we shorten the timeline of the deal. We help coordinate the negotiation and execution of the purchase agreement. We are not attorneys, but are job is to quarterback the deal, which includes managing the attorneys and other professionals on either side of the transaction. We are included in all lines of communication, because our job is to manage every detail of the process to and through the closing.
In transactions of the size and scope we deal with, there are almost always lenders involved. Depending on the type of buyer, we are intimately involved with sourcing the lender, as well as providing the lender the information they need in the format they require. This step of the process occurs at different times in each transaction, but it is always concurrent with one or more steps in the closing process. This is a very involved aspect of the transaction, and we are well versed in working with lenders of all kinds. We understand there may be third party business valuations, real estate appraisals, survey’s environmental studies, and equipment appraisals that will be required from the lender. As you can imagine, the information needed to perform these reports is immense, and our process of collecting data up front greatly alleviates the pressure of completing these reports. Again, our goal is to minimize the time required of our sellers.
As these aspects of the transaction begin to come together, and we see that due diligence is coming to a successful conclusion, the lender has approved the deal, the purchase agreement has been fully negotiated and eventually executed, we have already begun to set up escrow.
We have developed a strong relationship with our attorney/escrow companies we use for our closing. They not only provide necessary closing documents, but they provide a number of other services to ensure a proper closing. These services range from UFOC lien searches, secured and perfectable liens on behalf of the seller, judgments searches, secured creditors searches, prorated costs calculations effecting the transactions, bills of sale, closing sheets and instructions, money deposits and wiring, etc. The phase of the process is critical, because it wraps the entire transaction up and has to be executed flawlessly. Very few escrow companies are experienced and adepts at handling business transfers, real estate, and the litany of other services that may be needed. The companies we use have that ability.
Once the transaction is successfully finalized, the buyer and seller will begin the next phase of the ongoing relationship, typically starting with the training and transition phase. If your goal is to realize a successful closing, we will help you achieve that goal. We are “hands on” from the beginning until the end, and we take no step for granted. Call Les Wozniak of the The George Ryan Group at 214-682-8562 to begin this life changing process. We are ready to work with you to make your dream a reality.